Microsoft Earnings, Peloton Earnings

In today’s update, we will wrap up our Big Tech earnings reviews with Microsoft. We will then conclude the discussion with a look at Peloton earnings.

To set the scene, Microsoft and Peloton are in some ways complete opposites. Microsoft has been reporting some of the cleanest, all-around solid earnings releases in Big Tech. Peloton is in the most precarious of positions in terms of companies that we check in on from time to time. It’s been six months since we looked at Peloton’s earnings.

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Microsoft FY4Q23 Earnings, The Microsoft Business, Apple vs. Microsoft

Hello everyone. We will continue our earnings reviews with the second-largest market cap company: Microsoft. The discussion includes Neil’s thoughts on Microsoft’s FY1Q24 guidance, the big picture regarding Microsoft’s business, and the competitive dynamic found with Microsoft and Apple.

Microsoft FY4Q23 Earnings

When it comes to Microsoft's quarterly earnings releases, there usually aren’t many surprises. Management gives very detailed segment guidance for the current quarter. It’s not common for results to deviate from those numbers. This is one benefit found with having so much enterprise-focused recurring revenue – it’s easier for management teams to forecast out for the remainder of the quarter (i.e. two months). As a result, earnings focus is usually put squarely on management’s new guidance and insights as to how business has been trending during the current quarter.

Along those lines, there weren’t many surprises found with Microsoft’s FY1Q24 guidance, although it’s easy to see why some people may have been spooked. Microsoft (smartly) downplayed revenue contribution from AI in the near-term (i.e. don’t expect much acceleration in cloud revenue growth) while mentioning a larger increase in cost of revenue (i.e. don’t expect much margin improvement) and a need for greater capex in FY24.

It's been easy to talk away slowing or steady revenue growth in the current environment as long as

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